“Acquisitions don’t have to be major to be important,”
Frost, who owns about $815 million of Teva shares, said in an
interview on Nov. 19 in his Miami office. “The idea of the
multibillion-dollar type of acquisition is going to be reserved
for very special cases going forward, in which the desirability
is so compelling and so game-changing that everyone will feel it
has to be done.”

Frost’s comments signal the world’s biggest generic
drugmaker may be shying from a strategy that saw it buy Frazer,
Pennsylvania-based Cephalon Inc. for $6.2 billion and Ratiopharm
GmbH, based in Ulm, Germany, in a $4.9 billion deal. Petach
Tikva, Israel-based Teva has made 25 buyouts in the past 10
years, including five valued at $3 billion or more, according to
data compiled by Bloomberg.

The company’s Israeli shares gained 1.6 percent to 155.60
shekels, the equivalent of $39.84, in Tel Aviv. The benchmark
TA-25 index rose 0.3 percent to 1,208.66. Teva’s New York shares
climbed 1.8 percent yesterday, leading gains in the Bloomberg
Israel-US Equity Index of the largest Israeli companies traded
in New York.

‘New Products’

“There is the opportunity for product acquisitions, for
small company acquisitions, for technology acquisitions, and to
bring in new people who themselves are capable of creating the
new products,” Frost said.

Teva’s board tapped earlier this year Jeremy Levin, a
former senior vice president for strategy at Bristol-Myers
Squibb Co., to become the chief executive officer of the world’s
largest maker of generic medicines, as it seeks to diversify in
branded drugs. The CEO, who joined the company in May, plans to
give investors a strategy update, dubbed “Project Spring,” on
Dec. 11 in New York.

American depositary receipts of the Petach Tikva, Israel-based company have dropped 2.2 percent this year, lagging behind
the 8.3 percent rally for the MSCI World Pharmaceutical Index,
as investors remain skeptical the company can sustain growth for
its branded multiple-sclerosis drug Copaxone. Teva’s ADRs trade
at 7.3 times estimated earnings, the lowest valuation among the
world’s 20 biggest drug companies, which have an average price-earnings ratio of 13.4.

Teva’s stock is undervalued and investors will realize that
as Levin implements a new strategy, said Frost, who became a
Teva shareholder when he sold his generic-drug maker Ivax Corp.
to Teva for $7.6 billion in 2006.

Copaxone Outlook

“On the novel product side, Jeremy brings experience to
the table that we didn’t really have at Teva before,” he said.
Levin and Michael Hayden, Teva’s new chief scientific officer,
“will have their influence permeate the company so that the
mindset will over time shift from being a generic company to a
more broadly based pharmaceutical business,” Frost said.

Copaxone sales will hold up, Frost said. The drug, an
injection that accounts for about 40 percent of U.S. sales of
multiple sclerosis treatments, faces new competition from
Novartis AG’s oral drug Gilenya. U.S. regulator are reviewing
another MS pill, Biogen Idec Inc.’s BG-12. Generic-drug makers
are also appealing a court decision that upheld Copaxone’s U.S.
patents through 2015.

“Copaxone will be around for quite a while -- I’m sure of
it,” Frost said. “At a certain point, it’s possible a generic
will affect certain markets, but the product itself will
continue to be important in other markets.”

Emerging Markets

The U.S. court decision may give Teva more time to switch
patients to a new, higher-dose version of the drug. Teva has
said that a late-stage trial of a longer-acting formulation
reduced MS relapses more than a placebo and showed a
“favorable” safety profile.

Teva is also considering an entrance into emerging markets
from Brazil to China where the company’s presence is relatively
smaller, Frost said.

“There is room for a lot of creativity at this point,”
said Frost, looking out at Miami’s Biscayne Bay. “The
creativity will go along with experience.”